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Diminishing returns — reaping what rewards?

Diminishing returns — reaping what rewards?
return on invested capital

UH-OH: With the economy in recession and retail sales a mixed bag at best last year, textiles vendors were having a tough time justifying the money they were spending to add capacity or update their plants and equipment. After spending more than a billion dollars in recent years to add capacity, some companies are now trying to cut their losses by shutting down much of that capacity they were crowing about just a few years back.
In the midst of a broad industry downturn, companies have slashed their capital outlays, but even at reduced spending levels they're finding it tough to increase the return on their investment. Indeed, during 2001 only Mohawk Industries managed to increase the return on its invested capital. In many cases, return was only a fraction of what it had been the year before. A case in point was Dan River, where the return on investment tumbled to just 0.1 percent from 7.4 percent the prior year.
Source: Home Textiles Today market research
Rank Company 2001 2000
1. Mohawk Inds. 18.5% 17.7%
2. WestPoint Stevens 8.8 9.9
3. Quaker Fabric 7.2 8.8
4. Wellman 2.2 4.7
5. Polymer Group 2.2 5.6
6. Cone Mills 1.4 6.0
7. Burlington Inds. 1.1 3.5
8. Dan River 0.1 7.4
9. Pillowtex -4.9 75.6
10. Guilford Mills -9.3 1.1

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